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As the April 15 tax deadline approaches, some investors will soon make a last-minute individual retirement account contribution.
Tax day is the deadline for 2025 IRA contributions, which typically brings a surge in deposits — and this season is no different, according to Fidelity Investments.
During the two weeks before March 20, average IRA contributions were up 18% compared to the previous five weeks, Fidelity data found. Nearly three-quarters of those deposits went to after-tax Roth IRAs vs. traditional pre-tax IRAs.
Whether you’re eyeing a Roth or traditional IRA contribution, it’s important to “know your numbers,” Rita Assaf, vice president of retirement offerings at Fidelity Investments, told CNBC.
For 2025, the IRA contribution limit is $7,000, with an extra $1,000 for investors age 50 and older, assuming the investor has at least this much income from working.
There’s no upfront tax break for Roth IRA contributions, but the funds grow tax-free and investors generally won’t owe taxes on withdrawals in retirement.
By comparison, certain traditional IRA contributions provide a deduction, but the money grows tax-deferred and future withdrawals are subject to regular income taxes.
However, not everyone qualifies for Roth IRA contributions or the deduction for traditional IRA deposits. Here are some key things to know before making a last-minute investment.
Who qualifies for 2025 Roth IRA contributions
Your eligibility for Roth IRA contributions depends on earnings, and many investors overestimate how much they can deposit, according to Assaf with Fidelity Investments.
“Part of the struggle” is eligibility is based on “modified adjusted gross income,” or MAGI, which can be confusing to calculate, she said.
Plus, there are different versions of the MAGI calculation, which vary by tax break, according to the IRS.
For Roth IRA contributions, the number starts with your adjusted gross income (line 11a on your 2025 tax return), then adds back certain tax breaks, such as deductions for IRA contributions, student loan interest and others. The calculation also subtracts income from Roth conversions and retirement plan rollovers.
For 2025, you can contribute up to $7,000 (or $8,000 if age 50 or older) into a Roth IRA if your MAGI is less than $150,000 for single filers or under $236,000 for married couples filing jointly.
The contribution limit phases out, or gets smaller, as MAGI rises, with a complete phaseout at $165,000 for single filers and $246,000 for married couples filing together.
Who is eligible for the 2025 traditional IRA deduction
Anyone with earned income can make traditional pre-tax IRA contributions, but the deduction depends on your MAGI and participation in workplace retirement plans.
Workplace plan participation could include you or your spouse’s 401(k) contributions, company matches, profit-sharing or other employer deposits. With a company plan, your traditional IRA deduction phases out, depending on your filing status and MAGI.
However, there’s more to consider than a possible current-year IRA contribution deduction. You should weigh your investing goals, current and future income tax brackets, along with possible tax diversification across accounts, experts say.
“Don’t just rush to contribute because of the deadline,” said certified financial planner Joon Um, managing owner of financial firm Secure Tax and Accounting in Hayward, California. “Make sure it actually fits your situation.”